Preet Bharara: Insider Trading Is “Rampant” On Wall Street

As U.S. attorney for the Southern District of New York, Preet Bharara has led one of the government’s most aggressive crackdowns on insider trading. Since 2009, his office has brought charges against 83 people and four entities and won 78 of those cases by either a guilty plea or at trial. This is the edited transcript of an interview conducted on Sept. 23, 2013.

Let’s begin by getting some sense of the nature and scope, the size of the insider trading investigation.

It’s not one investigation. There have been a series of investigations done by my office, in partnership with the FBI, and also closely coordinated with the SEC [Securities and Exchange Commission] in most cases. The scope of the insider trading problem generally, I think we’ve discovered, has been quite broad and quite deep. Fair to say that insider trading has been for a while, on Wall Street and elsewhere, rampant.

We have cases that go from coast to coast. We have cases that are in all different kinds of financial sectors, including the banking sector and the technology sector and the pharmaceutical sector.

We have people who have been caught up in our problems and have been convicted and have gone to jail who are at hedge funds, who are at trading firms, who are at expert networking firms, who are insiders at Fortune 500 companies also. …

How many people have been either charged or convicted?

As of today? We have charged I think 87 and convicted either by guilty plea or at trial about 75.

And how many people are currently under investigation?

That I can’t tell you, but investigations are ongoing in a lot of cases.

How would you characterize this in terms of other investigations of the financial industry?

When you’re talking about a particular breed, type of crime, insider trading, it’s as bad as we’ve seen as compared to other areas. You have, as I’ve said, people from all walks of the financial industry who have been involved in it. There has been, unfortunately I think, a kind of casualness and cavalierness to the behavior that [they] have engaged in.

What we have seen for the first time I think in recent times [are] people who are parts of vast networks of insider trading, and they have in some cases not just one person to tip them at a company, but they have a backup tipper, and they have another backup tipper behind that backup tipper. You get the sense that it’s a pretty pervasive and serious problem.

How did it get to be so pervasive, do you think?

I don’t know. I came into office only four years ago, and a lot of these investigations had begun before I got here. What sometimes can happen, if there is not a sustained effort to engage in law enforcement activity and deterrents [is] that people can start to get the sense that some kinds of laws are not being enforced and not being enforced strongly, and people can get the sense that they can do what they want.

And what’s important for our efforts, along with the FBI, is to make sure that there is a price to pay for engaging in that conduct, and that we’re not just doing it in a big burst now, but that we’re going to continue to bring those cases as are appropriate over time so that people don’t get the sense [of] “Well, you know, the cop’s not on the beat anymore, and we can keep going back to old ways.”

I think it was you that said that insider trading appears to be baked into the model of the hedge fund industry.

No, I don’t think I said that. I think there’s nothing inherently wrong with a hedge fund or with the hedge fund industry or with expert networking firms, for that matter.

The problem is when you have certain kinds of institutions that decide to make their business model a criminal one. When that happens, you have a problem. And when that happens, you’re going to have people knocking at your door and investigating and using every aggressive tool that we can to make sure that you stop doing it. And if you can’t stop doing it, there will be consequences.

So you wouldn’t say that insider trading is something that has pervaded the hedge fund industry particularly?

There have been a lot of examples of insider trading at hedge funds, and we have brought a lot of those cases. And there are particular hedge funds, I think it might be fair to say, given the cases that we have brought, where the problem was a lot more pervasive and perhaps even central to how they were doing business. But that’s not to say that everyone in the hedge fund industry is corrupt. In fact, that’s not the case.

I think it was an official at the SEC who said that if a hedge fund is beating the market index by more than or around 3 percent a year consistently over time, that they should be looked at. Would you agree that’s a reasonable standard?

We don’t want to criminalize success. There are people who are good at picking stocks, and there are people who do it legitimately. And some of them, over the course of capitalism and human history, have done quite a good job and have beat the market time and time again.

I’m sorry; I would respectfully perhaps disagree with that person. Just because you’re beating the market doesn’t mean there’s criminal activity. We usually need something more than that before we’re going to start taking a look.

… How were you apprised initially of the [Galleon Group founder Raj] Rajaratnam investigation?

I started on a Thursday, and I asked to be briefed on the significant cases that were going on in the office. There were many, many of them, and they were in terrorism, and they were in the gang area, and they were in the organized crime area. Some of them were in the financial fraud area, and this was one of them. I probably heard about this case within the first few days of being sworn into office.

… How did it strike you at the time? What do you recall from that briefing?

I guess I recall thinking this is pretty bad conduct and that people had done a pretty good job getting the investigation off the ground and that at some point we were going to be in a position to arrest a number of people and that it would hopefully have a deterrent effect, because people at that point, before the wave of arrests had happened, had probably not been aware to the extent that they are now about how pervasive the problem was.

Part of our goal and our mission is not just to hold people accountable, which we do and is a central part of our job, but also to make sure that other people who are thinking about engaging in that conduct don’t. And the way that happens is you shine a light on the problem by arresting people when appropriate, by making sure that the facts relating to what their conduct was becomes known through criminal complaints and indictments and through trial, and then you convict them.

… Was there a point in time where you were taken aback at realizing the scope of all of this?

I guess it’s fair to say that over time, as you began to see how many people were involved and how widespread it was and how geographically widespread it is and how many people in different industries were engaging in it, you start to think to yourself, what’s going on here?

In fact, at that point I began to speak a little more openly about it. I gave a speech in which I talked about how insider trading and having access to material nonpublic information, was a little bit like trying to get an edge from taking a steroid in sports, you know? It puts a black mark on the entire enterprise, and it’s not good for anybody and makes people lose faith in the enterprise and makes people, in this context, lose faith in the market.

“What we have seen for the first time … [are] people who are parts of vast networks of insider trading, and they have in some cases not just one person to tip them at a company, but they have a backup tipper, and they have another backup tipper behind that backup tipper. You get the sense that it’s a pretty pervasive and serious problem.”

I have gone to business schools and spoken at all the major business schools in the last few years to talk a little bit about these cases and a little bit about how people need to make sure that they’re working at places that they can respect and that have integrity. And if they start to see bad things going on, they should be in a position to report something.

Part of the problem is — and the thing that is somewhat dispiriting for a person like me — is not so much that these things were happening at these firms, whether you talk about insider trading or other kinds of financial fraud, but that there’s so many people at these places who had an inkling that something bad was going on and didn’t do anything about it and didn’t report.

And that’s true not just in the financial fraud area. That’s true in the public corruption area. It’s usually the case that before the bad stuff really hits the fan and FBI agents come in with raid jackets and start making arrests and start seizing documents that there were other people, not the criminals but people who were good, who looked the other way and enabled the fraud and enabled the bad conduct.

Part of what we’re trying to do with our arrests and with some of the speaking that I do is to reach not just the ears of people who were thinking about committing crimes, but reach the ears and the minds of people who are in a position to stop it in the first place.

How do you get good people to say something?

I think you do it by making the point. I think you do it by making sure that regulators and the public and prosecutors to a lesser extent also, because we have fairly blunt instruments, are thinking about culture at firms. It happens to be the case — and I’ve said this many times also, as you may have seen — that there are some companies and there are some trading firms that engage in more misconduct and have more instances of misconduct at them than others.

What’s the difference? The difference often is a question of leadership at the top and controls that are in place and culture at the institution. And the more likely it is that people start to get the message that culture is important and that playing by the rules is important and that breaking the rules is not going to be tolerated, the more likely it is that bad things won’t happen at those places. And ultimately, if everyone understands that that is important, you have a better system, and you have a better market.

There are a lot of people on Wall Street who give a shrug to all this and think that this is a victimless crime, that it really doesn’t hurt anybody. What is your response to that?

Nothing could be further from the truth. A few things. First of all, the market is a victim, and the system is victimized when law enforcement and others allow people to, in a casual and cavalier way, break the law and subscribe to their own set of rules.

That causes average people not to trust the market, not to want to put their capital into the market, and I think that’s something that is a serious problem with allowing insider trading to run amok.

Second, what people apparently don’t appreciate as much as they might is that in a lot of these cases, you have people who are insiders at companies, at Fortune 500 companies and others that are publicly traded, and are on the side, for a little bit extra cash in some cases, providing inside information about those companies.

We have talked to the general counsels and the CEOs of some of those companies, and you ask them if they think they weren’t victimized by some of their own employees on the side selling information about the company, about their revenues and about their margins and other really, really important secret material nonpublic information within the company, to high bidders on Wall Street. They’re victimized also.

The third category of people who are victimized when insider trading goes on unchecked are all the honest people out there who are engaging in trading based on publicly available information, who are doing their research properly, who are not cheating, who are not taking the proverbial steroid of material nonpublic information.

I was on the street in Washington D.C. last week — and this has happened a couple of times — and a person ran into me and recognized me as the U.S. attorney here, and he said he wanted to shake my hand and thank my office for the work that we were doing.

It turns out he’s a hedge fund manager, and he says, “We try to play by the book, and we’re sick and tired of people who are rumored to be cheating and rumored to be trading on secret information to get an edge over us that’s illegal.”

So some of the best benefit from our work with the FBI and others is to make sure that the people who are doing it the honest way and making an honest wage and making an honest profit based on true and proper and diligent research are not getting pushed under the bus.

I don’t think anybody can dispute that it erodes people’s faith in the market, and that’s not a good thing. But the argument goes that the average investor was going to buy or sell a stock not from another individual but from an exchange, and were going to do it anyway, regardless of what insider information a hedge fund had or didn’t have.

Yeah, but that doesn’t change the truth of the three things that I just described. And by the way, also related to that point, there have been cases where you’ve had a massive amount of short selling done in a stock based on material nonpublic information, and in some instances, you actually have identifiable counterparties who may not have engaged in the trade on the other side had they known what the information was.

So you have the system victimized; you have confidence victimized; you have publicly traded companies whose information is stolen, and they are victimized. You have honest people who are in the process and would trade on Wall Street, and they are victimized. And then you sometimes have identifiable traders who are on the other side of what were essentially cheating trades who are also victimized.

There’s an academic study that shows that since the indictment of Raj Rajaratnam that there has been a 50 percent decline in the price of acquired companies, that you don’t have these unusual run-ups. … Does that surprise you?

It’s not that surprising that, given how many cases we have brought and how much attention has been put on those cases, that people have altered their behavior, and if there are a lot of people who finally have appreciated that they can’t engage in misconduct because there’s a good chance it might be found out — and it’s a good chance that they will not only be facing a fine but facing a prison cell — that they’re cutting it out.

I think common sense tells you that people who are really smart and privileged and who for a living engage in cost-benefit analysis, it’s not going to be true of everyone, but a lot of them realize, if there’s the ultimate cost to be paid, which is separation from your liberty and your family and from freedom, then you might not want to engage in it. …

The defense that’s been made repeatedly by those indicted in the Rajaratnam case … is the so-called mosaic theory. What is the mosaic theory, and why is that not valid?

Every case stands or falls on its own merits, and it depends on what’s going on in a particular case. It happens to be the case that mosaic theory is in some circumstances an appropriate defense.

In other words, if the person is getting information from lots of different places legitimately and is smart enough to piece them together and make a determination about whether or not to buy or sell a stock, there’s nothing wrong with that. And we have never said there’s anything wrong with that.

“There’s nothing inherently wrong with a hedge fund or with the hedge fund industry … The problem is when you have certain kinds of institutions that decide to make their business model a criminal one.”

Now, a lot of defendants have made a lot of arguments in a lot of cases, and all those arguments have failed so far. The kinds of cases that we bring are not ones where people are really smart and doing their homework and piecing together legitimate bits of information and connecting the dots.

We’ve brought cases where people have cheated to get information, have paid people on the side to get completely nonpublic material information, where people have decided that they’re going to pay people who are inside companies for information that they’re not supposed to be providing. …

Others critics say that you’re never going to clean this up, that Wall Street has always been driven by people aggressively acquiring information and that today, in an information age when there’s just a fire hose of information out there, that cleaning all this up is never going to happen.

I guess we should all pack up our bags and go home. You know, people who say if you’re not going to ultimately solve every single problem, you’re not going to eradicate all crime in a particular area, if they think that means we shouldn’t try, and we shouldn’t try to make things better, and we shouldn’t try to hold people accountable for breaking the law, whether we shouldn’t try to deter other people who can be deterred from breaking the law, that seems to me a silly argument. …

Hedge funds increasingly use sophisticated technology to process and sort information, and you have countered with your own aggressive use of sophisticated programs and software. Can you talk a little bit about the importance of that use of software, such as Palantir?

… I think it is really important in all areas of prosecution for the government to be on top of things in the same way that bad guys are on top of things. Insider trading has been around for a long time, but one of the ways in which it’s a little bit different now is that there are so many transactions that occur today as compared to the time of Michael Milken — I mean really proliferated many, many, manyfold, and it becomes that much harder to try to isolate the illegitimate trade or the trade that was based on illegitimately acquired information and separate that from the mass of legitimate trades that have gone on, that you need to have something more than just human eyes and a box of documents. …

Can you talk about what software you are using?

No, I don’t want to talk about any particular things, but I do know that in conversations I’ve had personally with folks at these agencies that I just mentioned are bullish on the ability to be able to catch patterns and trends by looking at data in real time, as opposed to a year or two later finding out that something bad had been going on.

The importance of finding something out in real time can’t be overstated, because if you find out about something in real time, you’re more likely to have documents that have not been destroyed; you’re more likely to have evidence that hasn’t been taken away; you’re more likely to find witnesses who haven’t wandered away and who might be willing to talk to you.

I want to talk about the use of wiretaps in the Rajaratnam case and the importance of that to the investigation.

The decision to wiretap or to use wiretaps, approved by an Article III District Court judge, was made before I got to this office, and it was a very smart decision, because as people understand and your viewers will understand, the crime of insider trading is a crime of communication, and it doesn’t take a rocket scientist to appreciate that it might be useful to have the actual communication, because otherwise, insider trading offenses are difficult to prove in a court of law.

When I came into office, we continued the investigations that were already here. We expanded some of them. We started new ones. And we vigorously defended the use of those wiretaps. And that was successful, both in District Court and in the appeals court.

It’s important for a lot of reasons, not the least of which is that you can prove your case a little bit more easily depending on what you have on a wiretap. But also it sends an important deterrent message. It tells people that in an age when some people may have thought that they could be very casual about engaging in insider trading activity, that maybe the government is listening.

The verdict in the Rajaratnam case, it took a while to come down. What was the mood here? What was your feeling how things would go?

Jury trials are hard. What people don’t appreciate, I think, is that it is hard to convict someone of a crime. … and that was certainly true in this case. When you have a complicated case, it sometimes takes a while for the jury to sift through the evidence. Sometimes jury verdicts come back in an hour; sometimes they take days and days and days.

During the time that people were thinking about what was going to happen in this case, like happens in other cases where the verdict takes a long time, people remind themselves about how historically there have been complicated financial fraud cases where sometimes jury deliberations stretch on for much longer than the 11 or 12 days it did in that case, for weeks and weeks and weeks, and ultimately everyone is served.

The defense is served, the prosecution is served, the public is served, and people’s faith in the justice system is served when they appreciate and understand that a jury didn’t just rush to a conclusion when they got to the deliberation room. …

… When did SAC [Capital Advisors] show up on your radar as [an] increasingly important focal point in your insider trading investigations?

There’s no particular moment when you’re talking about an institution that I think you can point to and say that’s when something came into sharp relief as a big deal. …

It sounds silly when I say this, but it is true. We think every case we bring is important, and there are a lot of cases that we bring that don’t come together for a while, and we just go with the facts in law.

Some cases are bigger than other cases.

Yeah, maybe in the minds of some people, right.

But the investigation at a huge hedge fund, SAC certainly, is a big one in your portfolio.

Sure.

How is it that you could indict a company but not the man who founded and ran the company?

I think you’re referring to a particular case. I’m not going to talk about any particular case, particularly one that’s pending. What I can say, generally speaking, is the law allows the bringing of criminal charges against the business organization. That has been the case for a long time. It’s been the case since at least 1909. And the Justice Department and prosecutors within the Justice Department are required to look at a number of factors to decide whether or not it’s appropriate to do so.

Among those factors are the pervasiveness of illegal conduct at the institution, whether or not there’s been an effort to remedy those problems, whether or not simply bringing charges against individuals suffices. Taking all those considerations into account, we make a decision to either bring a charge against an institution or not. Sometimes it’s the case that you bring a charge against the head of an institution and you don’t bring a charge against the institution itself, and sometimes the reverse is true. And those are two separate matters.

In the case of SAC, you indicted the company but not Steven Cohen.

I’m not going to comment on how we went about making the decision with respect to SAC. It’s a pending case. But generally speaking, we make decisions based on what evidence and facts we have. …

… What did you mean when you announced the indictment against SAC and you called it a “magnet for market cheaters”? What were you talking about?

Again, it’s a pending case. Usually with pending cases, I make a statement about it at the time of the charge, and then we wait for things to unfold in court.

“There’s so many people at these places who had an inkling that something bad was going on and didn’t do anything about it.”

Let me say, generally speaking, when you’re talking about an institution that has had a number of people who are guilty of, and proven to be guilty of, misconduct, you start to think whether or not there’s a culture problem in that place. And I made this point not just about hedge funds; I made this point about public corruption as well.

The same can be said to be true for other institutions that have been indicted, that prosecutors for good reason take a look and see whether or not there is a pattern of misconduct going on at a place and whether or not there’s a good culture of hiring good people and a good culture of getting rid of people who are problematic and a good culture of having zero tolerance for people who might be getting close to the line, much less galloping over the line. …

One controversy about insider trading law is that there is no statute, that it is all case law, and it gives you a lot of leeway. Is that a good thing from your point of view?

The more clear the law is in any area, it’s a good thing for prosecutors, and it’s a good thing for the public.

Should there be a statute?

I’m not going to comment on whether or not there should be a statute or not. I think the cases that we have brought have been pretty clear.

When you’re going to bring a criminal insider trading case, as opposed to a regulatory action, we have to prove not only the elements that are set forth in a case law, but also we have to prove criminal intent. We have to prove beyond a reasonable doubt to a jury, unanimously, that the person who has been charged knew what he or she was doing was wrong.

So if you look at the cases that we brought, … 75 convicted and a dozen others pending trial, that we are not bringing cases that are about people who were coming close to the line. We brought cases about people who have galloped well over the line.

In almost every instance we have examples of people who not only have engaged in the elements, trading in material nonpublic information, but in connection with that, there is evidence of people who have destroyed evidence or who have covered up evidence or who have told other people to lie or who have made admissions about knowing what they were doing was wrong.

In a famous example in a concluded case, as you may know, there was an example of a person who, after there had been some reporting about a potential investigation by the FBI into insider trading, went home to his home that evening, and as he confessed to his friend, who turned out to be cooperating with the government, he took a pair of pliers and he smashed up the flash drive on which he kept the material, non-public information into bits and pieces and then at 1:00 or 2:00 in the morning went out into Manhattan streets and began depositing bits and pieces of that flash drive into different trash trucks that were going around town. And when you have evidence like that, that’s not a gray area. That’s a pretty bright line. …

If you could just respond to the contention that is made by the Defense Bar that prosecutors like to keep insider trading law relatively undefined so that they can stretch the law at their will.

I don’t believe we’ve been stretching the law, and I don’t think prosecutors have any interest in keeping the law ill defined. I think it is absolutely important for people to have faith in the system, and for justice to be done that people understand in advance and have notice in advance of where the lines are.

There are some cases we can’t bring because we don’t have that evidence of criminal intent. And if somebody can actually argue that he had a good-faith belief that getting a certain piece of information and absolutely believed that it was appropriate and proper and a lot of other attributes to that information, without our being able to prove that there was criminal intent and that he knew what he was doing was wrong —

Even if it was insider information?

— we can’t bring that case. Again, it depends on the circumstances of the case. But the cases that we bring and that we feel comfortable in bringing are the ones where people are absolutely breaking the law. They know they’re breaking the law, and they don’t want to get caught breaking the law.

A lot of these people mount defenses in which they say, “My job is to collect information to inform the trades that we make, and that what we’re doing is simply aggressively pursuing research on stocks and that it doesn’t cross the line.”

… A lot of people do that, and that’s fine, except the cases we bring are ones in which people are being paid, sometimes cash money, to provide before the public release of revenue numbers those revenue numbers to people where [there] are hedge funds trading on the information. That’s called insider trading, and that’s very clearly criminal. And those are the kinds of cases that we’ve been bringing.

The role of expert networks is important to all of this. They’ve been around for a long time, and people pay them for their information. When does that cross the line?

It crosses the line when people decide they’re going to be giving inside information about, for example, publicly traded companies that they know is material and nonpublic for the purpose of it being traded. …

… How hard is this to prosecute if you don’t have a wiretap?

Many, many cases we’ve brought without wiretaps. And historically every case was prosecuted, and many of them successfully, without wiretaps. It depends on the nature of the case. …

For our part, we bring a lot of cases in the traditional way, and some of them we don’t even have cooperating witnesses. But you show through evidence of calls that are made, and you show through documents, and you show through common sense that insider trading activity may have taken place. That’s a classic way of proving it, and we bring a lot of cases of that nature. And in recent times, as you pointed out, we brought some cases that have had the benefit of wiretaps. But both will probably be a part of the portfolio going forward.

Hypothetically, in a company that is engaged in widespread insider trading, at what point is the principal of that company responsible criminally?

We don’t have vicarious liability with respect to individuals, so if this person was doing something bad and was breaking criminal law, this person, depending on what the circumstances are, simply by virtue of being above that person is criminally liable also.

Obviously we have conspiracy statutes and we have aiding and abetting statutes, and we have the criminal ability to bring a case against an institution. But the dynamic you’re talking about is not something that we have in a criminal system.

So a hedge fund manager doesn’t have a responsibility to supervise the traders that work for him?

You’re leading me down a path of talking about what particular theories you might have criminally against individuals. Let me say this. Everybody at every institution has, as a common-sense ethical and corporate culture matter, the responsibility to supervise properly everybody there and has a responsibility to make sure that everyone is obeying the law.

And in connection with trying to figure out whether or not it’s appropriate to bring a charge against an institution, that becomes an incredibly important and relevant factor, so that if you have management looking the other way, you have management saying it’s OK to engage in insider trading, and it’s OK if many of you engage in insider trading, and it’s OK if we know that you’ve maybe engaged in insider trading, we’re going to hire you anyway, that’s an important factor in considering whether or not to bring a case against an institution. …

But I’m not hearing that it is an argument for bringing a case against a manager, a principal, an owner of a company.

To bring a criminal case against an individual, we have to bring them in the way that we’ve been bringing them for a long time, which is a criminal intent on the part of an individual, and that that person knew what he or she was doing was wrong.

Again, I’m not going to engage in hypothesizing about the theories in which we might bring a case against an individual that you’ve named, but we have the responsibility to bring criminal cases based on evidence beyond a reasonable doubt. That includes criminal intent and proof of criminal intent beyond a reasonable doubt. …

I’ll make a broader point. We don’t bring criminal cases against people for negligence.

Because you can’t? Because you don’t?

Because in almost every circumstance, negligence does not meet the criminal standard of the mental state for criminal intent. I’m not going to speak for what other agencies that have different missions are able to do, but criminal charges are based not on negligence but based on criminal intent …

But if I’m driving recklessly down the street –

Recklessness is also something different from negligence.

If I’m negligently driving, if I have a car that is faulty, at what point –? I guess for a layman listening to this, they’re going to think, wait a minute; at some point negligence is an encouragement to the commission of crime. If I’m looking the other way –

I don’t want to talk about pending cases. In a drug case, you can bring a charge against someone who knew that he or she was carrying five kilograms of cocaine by plane from Colombia to New York to distribute, and then goes to the drug dealer here and gets the money and engages in a narcotics exchange. That person has absolute knowledge of what was going on.

There are circumstances in which, in the drug context, for example, that people made an agreement to engage in that conduct, and you might be able to charge a person who engaged in that agreement even if that person wasn’t the courier, even if that person didn’t actually manufacture the cocaine or that person didn’t distribute the cocaine, depending on what that person’s role was in the organization.

And there are some circumstances in which the facts surrounding the situation are so compelling that even if the person can claim that they never looked inside the package, but they knew they were getting the product from a narcotics dealer and they knew they were delivering it to a narcotics dealer, in certain circumstances, in the narcotics context, for example, the fact that you stuck your head in the sand does not cause you to escape criminal liability.

But again, everything depends on the facts and circumstances of the particular case.

Do you think you’ll ever see a case where negligence rises to criminal liability in the hedge fund world?

I would doubt that.

We know over the years that certain funds were generating a lot of suspicious trading referrals. What role do those play in sparking or informing your investigations?

We get cases from all different sources. Sometimes they’re referrals from agencies. Sometimes we are the driving force behind the cases ourselves because we come across a tip. Sometimes we get someone who will walk in and tell us that they’re aware of illegal activity going on.

Sometimes we’ll bring a case against one person and that person then decides to become a government witness and will wear a wire or will talk to other people who he has a belief are engaged in criminal conduct and will get cases that way that were not part of a referral. But they’re all ways in which we end up pursuing investigations and bringing cases.

Just generally, I want to ask you about what this tells us about the culture and the ethics of Wall Street.

As I said when we first brought the Rajaratnam case, prosecutors in my office, and this includes myself, are not anti-Wall Street. Most people who work in Wall Street are great and honorable and ethical and want to do the right thing. Most people who work at these various institutions that we have been talking about are honorable and ethical and want to do the right thing.

It is the case, however, that there are places where people think that the rules don’t apply to them and people think that they can get away with things that they shouldn’t. And part of our job is to make sure that the world understands, in addition to holding people accountable and to getting money back for the victims when there are victims in a case, part of our responsibility and obligation is to make sure that everybody understands that no one is above the law, that it doesn’t matter who you are, how much money you have, who you’re connected to, that you have to play by the same rules as everyone else.

Rules are rules, and the law is the law, and if someone wants to change them, they can. But until then, we have an obligation to enforce it without any consideration for how big a person somebody is. …

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